If you’re in the mood for some comedy, Labour’s newly announced intention to introduce rent ceilings and three year tenancies for private renters is side-splitting stuff. “As well as building more houses and helping people get on the property ladder, a Labour government will take action immediately to make life better for all those renting their home,” says Ed Miliband.
Brandon Lewis, Minister for Housing & Planning, thinks this is simply further evidence that Labour are in a state of chaos. “First their energy price freeze collapsed when it was shown it would lead to higher prices and now their flagship policy to help tenants would actually lead to higher rents,” he says. “Rent controls never work – they destroy investment in housing leading to fewer homes to rent and poorer quality accommodation.”
I will concede that Miliband’s plan to end exorbitant agency fees can only be a good thing. When we founded Rentify, part of our mission was to sidestep the bog of paperwork and red tape that so often stands between a straightforward tenant/landlord relationship – that’s why we don’t charge fees to tenants. It costs, on average, £350 to get past an agent’s credit checks and administrative hurdles. Much like lawyers, who charge hundreds of pounds to write a single piece of correspondence, lettings and estate agents place a startling amount of value on the time it takes them to update a spreadsheet and rattle off a poorly-spelled email. And many agencies charge in excess of £500, putting off prospective tenants and making the entire letting process a lengthy, complicated nightmare for landlords. At least solicitors have spent years studying for the right to rip us off.
But I struggle to understand the rationale behind rent control and three year tenancies, other than to try and get on side with private tenants, only 56% of whom are actually registered to vote. According to the English Housing Survey, once you allow for inflation, you can see that the price of private rent is actually falling. The stats also show that landlords tend not to increase rent for long-term tenants, negating the need for three year tenancies. And as the RLA indicates that the average tenancy lasts just four years, what would be the point?
“Anything that improves the position of young people in the private rented sector is to be welcomed,” says the Intergenerational Foundation’s Ashley Seager, “but these measures do little to address the long-term under-supply of housing or the tax subsidy given to buy-to-let.”
What I find the most baffling about this entire proposal is that Labour appear to have overlooked the fact that there are millions of voting landlords in this country. By transparently attempting to curry favour with ‘Generation Rent’, an unimaginative and patronising buzz phrase almost as insulting as ‘millennial’, Miliband has shot himself in the foot and simultaneously set himself up as against entrepreneurs and a free market.